Tricks of trade land builders in dock, HC sends notices

Acting suo motu, the Bombay High Court converted into PIL a letter written to it by an activist alleging illegalities in the sale of flats in Mumbai and Thane and issued notices to the state government, civic administration, income tax authorities and some of the leading developers in the city.

The activist, Thane-based Vikrant Karnik, had taken exception to a number of practices in the sale of residential and commercial spaces, including sale on the basis of “super-built up” area, evasion of taxes by builders by accepting part payment in cash, charging for parking spaces and profiteering by taking advantage of the shortage of affordable housing.

Karnik’s lawyer Ashish Mehta said a division bench of justices S J Vazifdar and B P Colabawala Friday issued notices to the respondents in the PIL, including the chief secretary, municipal commissioners of Mumbai and Thane, income-tax commissioner and leading builders including Lodha, Deewan, HDIL, Hiranandani, Conwood, Runwal, Kalpataru and Ajmera.

The case will be heard further after six weeks.

Karnik wrote the letter in October 2012, following a sting operation carried out by a regional news channel. In the letter, Karnik stated that builders were being high-handed in selling flats based on their “super built-up” area by loading approximately 45 per cent surcharge on the carpet area and charging on the basis of the increased area.

The activist also alleged that in the sale agreements with buyers, developers often showed a flat’s area less than its actual area to evade taxes. They also advised buyers to reveal in the agreement only such amount that may be determined as per the government’s rules and ask them to pay the remaining amount in cash, which was sometimes almost half-the-price of the flat.

According to Karnik, the prices of flats are not in consonance with the ready reckoner rates. Pointing out that almost 60,000 to 65,000 flats in Mumbai were lying vacant, Karnik argued, “It is regrettable that though there is a grave need for shelter in Mumbai and Thane, developers are selling most of these flats to investors. Even after the construction is completed, such flats remain vacant, and as a result, a wide disparity is created in the society.”